Valuentum Exclusive Analysis for the Discerning Investor

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Nike Has Posted 23 Consecutive Years of Increasing Dividend Payouts
Image Source: TradingView. During the first quarter of fiscal 2026, Nike returned $714 million to shareholders, consisting of dividends of $591 million, up 6% from the prior year, and share repurchases of $123 million. Nike has repurchased 124.4 million shares under its $18 billion program approved by the board in June 2022 for a total of approximately $12.1 billion. At the end of the quarter, inventories at Nike were $8.1 billion, down 2% compared to the prior year, while cash and short-term investments were $8.6 billion, down approximately $1.7 billion from last year. Nike continues to face pressure in its footwear division, though apparel sales were strong in the quarter. Footwear revenue fell 12% on a constant currency basis in China. Looking to the fiscal second quarter, revenues are expected to be down low single digits, while gross margins are expected to fall 300-375 basis points, including a net headwind of 175 basis points from tariffs.

Costco’s Shares Are Not Cheap
Image Source: Costco. In the fourth quarter of fiscal 2025, Costco’s gross margin expanded 13 basis points, while SG&A as a percentage of sales dropped 17 basis points, bolstering operating income. Net income for the fourth quarter was $2.61 billion, $5.87 per diluted share, seven cents better than expected and compared to $2.354 billion, $5.29 per diluted share in last year’s quarter. Long-term debt totaled $5.7 billion at the end of the quarter, while cash and short-term investments were $15.3 billion. Merchandise inventories fell to $18.12 billion from $18.65 billion at the end of last year’s quarter. We like the fundamental momentum at Costco and its outlook remains bright, but its valuation is quite stretched at the moment. We remain on the sidelines.

Dividend Increases/Decreases for the Week of October 3
Let's take a look at firms raising/lowering their dividends this week.

Dividend Increases/Decreases for the Week of September 26
Let's take a look at firms raising/lowering their dividends this week.

TJX Companies Is a Standout in Retail
Image Source: TradingView. During the second quarter, TJX Companies returned ~$1 billion to shareholders through share repurchases ($515 million) and dividends ($474 million). Total inventories as of August 2, 2025, were $7.4 billion compared to $6.5 billion at the end of the second quarter of last year. Management noted that the increased inventory position reflects “excellent buying opportunities” and that the company is “very well-positioned to flow fresh assortments to its stores and online throughout the fall and holiday season.” During the second quarter, TJX Companies generated $1.8 billion in operating cash flow and ended the quarter with $4.6 billion of cash. Looking to full year fiscal 2026, the company raised its diluted earnings per share outlook to be in the range of $4.52-$4.57, an increase of 6%-7% over last year’s mark. TJX Companies is a standout in retail, but its shares are not cheap. Shares yield 1.2% at the time of this writing.

Starbucks’ Turnaround Continues
Image Source: TradingView. During the fiscal third quarter, Starbucks opened 308 net new stores, ending the period with 41,097 stores. The company ended the quarter with 17,230 stores in the U.S. and 7,828 in China. Consolidated net revenues beat expectations in the quarter, increasing 4%, to $9.5 billion, or a 3% increase on a constant currency basis. Its non-GAAP operating margin, however, contracted 660 basis points, to 10.1%. Non-GAAP earnings per share of $0.50 declined 46% over the prior year and missed expectations. The coffee giant ended the quarter with $17.3 billion in short- and long-term debt and $4.7 billion in cash and investments. Starbucks’ global same store sales have now fallen for six consecutive quarters, but we expect improvement as the company heads into fiscal 2026. Shares yield 2.9% at the time of this writing.

Realty Income’s Dividend Remains on Solid Ground
Image Source: Realty Income. In June 2025, Realty Income announced its 111th consecutive quarterly dividend increase and its 131st increase since it was listed on the NYSE. The amount of monthly dividends paid per share increased 3.7% in the quarter, to $0.806, representing roughly 76.8% of its adjusted diluted AFFO. As of June 30, Realty Income had $5.1 billion of liquidity, including cash and cash equivalents of $800.4 million, while net debt stood at $28.5 billion. Looking to 2025, the company lowered its guidance for net income per share, but it increased the low end of AFFO per share to the range of $4.24-$4.28 from $4.22-$4.28 previously. Investment volume was increased to approximately $5 billion, up from $4 billion previously. Realty Income’s dividend remains on solid ground, and the REIT yields 5.5% at the time of this writing.

UPS May Cut Its Lofty Dividend
Image Source: TradingView. Looking to 2025, UPS is not providing full year revenue or operating profit guidance due to the current macroeconomic uncertainty. The firm is working hard to become more efficient with $3.5 billion in expected expense reductions due to its network reconfiguration and Efficiency Reimagined initiatives. That said, UPS registers a Dividend Cushion ratio of 0.4, below parity, and its lofty dividend yield of 7.8% speaks to risk of a dividend cut. We like UPS but would not be surprised if it slashes its payout in coming periods. Buyer beware.

Verizon’s Debt Load is Too High for Our Income-Oriented Preference
Image Source: TradingView. Verizon’s cash flow from operations totaled $16.8 billion in the first half of 2025, up from $16.6 billion in the same period a year ago. Free cash flow was $8.8 billion in the first half of 2025, up from $8.5 billion in the first half of 2024. Verizon’s net unsecured debt at the end of the second quarter was $116 billion, roughly 2.3 times consolidated adjusted EBITDA. For 2025, management is targeting adjusted EBITDA growth of 2.5%-3.5% and adjusted earnings per share growth of 1%-3%. Cash flow from operations is expected to be between $37-$39 billion on the year, with free cash flow of $19.5-$20.5 billion. We like Verizon but can’t get familiar with its massive debt load. Shares yield 6.3% at the time of this writing.

Dividend Increases/Decreases for the Week of September 19
Let's take a look at firms raising/lowering their dividends this week.